jakiro
Author: Arthur Hayes, founder of Bitmex, Medium; Compilation: Deng Tong, Bit Chain Vision Realm
The dust on the crust returned to Hokkaido, Japan.The sun is bright during the day, warm and pleasant, but at night, it is bitter.This weather mode causes sad snow, known as the dust on the crust.Under the seemingly beautiful unrelated electric power sector, ice and crispy snow lurking.This is something that hates.
With the acceleration of winter coming in spring, I want to relive the article “Dust on the Cruise” published a year ago.In this article, I proposed how to create a comprehensive supporting legal stable currency method. The existence of the stable currency does not depend on the Tradfi banking system.My idea is to combine the multi -cryptocurrency hedge with the short -term sustainable drop loss of the bearing to create a synthetic legal currency unit.I named it Nakadollar because I imagined that the use of Bitcoin and short -term XBTUSD “sustainable” swelling as a way to create a synthetic US dollar.I promised to support a reliable team at the end of the article, trying to turn this idea into reality.
How big is a year’s change.Guy is the founder of Ethena.Before participating in Ethena, Guy worked at a hedge fund worth $ 60 billion and invested in special circumstances such as credit, private equity and real estate.GUY captured garbage coins during the summer of 2020, and never turned back since then.After reading “The Dust on the Crusher”, he was inspired and decided to launch his own synthetic dollar.But as all the great entrepreneurs did, he hoped to improve my original thought.He did not use Bitcoin, but created a synthetic US dollar stabilizer using Ethereum.
GUY chooses Ethereum because Ethereum network provides native income.In order to provide security and handling transactions, Ethereum network validators directly pay a small amount of ETH for each block by protocol.This is what I call ETH pledge yield.In addition, because Ethereum is now a shrinking currency, the prices of Ethereum/USD long -term, futures and sustainable drop transactions have continued to be higher than the spot. This is the root cause.Short -term perpetual drop -down holders can get this premium.Combining the actual -owned ETH with a short -term or US dollar loss of the short -term swelling position, creating a high -income synthetic US dollar.As of this week, the pledged Ethena USD (SUSDE) currently has an annual yield of about & gt; 50%.
Without a team that can be executed, no matter how good it is, it is meaningless.Guy named his synthetic dollar to Ethena and formed a rock star team to start the protocol quickly and safely.Maelstrom became a founding consultant in May 2023. As a transaction, we received token for token.I have worked with many high -quality teams in the past, and Ethena’s staff has completed the task without cutting corners.For 12 months, Ethena’s stable currency USDE was only 3 weeks after the main network, and its circulation was close to 1 billion (TVL was $ 1 billion; 1 usde = 1 USD).
I believe Ethena can surpass Tether to become the largest stable currencyEssenceThis prophecy takes many years to achieve it.However,I want to explain why Tether is the best and worst stable currency in the cryptocurrency field.It is the best because it may be the most profitable financial intermediary in TRADFI and encryption.This is the worst, because Tether’s existence is to make its poor Tradfi bank partners happy.The jealousy of the bank and the problems brought by Tether’s guardians of the US Peace Financial System may immediately lead to the end of Tether.
For all misleading Tether Fudesters, I want to say clearly.Tether is not financial fraud, nor did Tether lie to it.In addition, I have the greatest respect for Tether’s founders and operators.But forgive me, Ethena will shock TetherEssence
This article will be divided into two parts.First of all, I will explain why the United States, the U.S. Treasury, and large US banks with political backgrounds want to destroy Tether.Secondly, I want to discuss Ethena in depth.I will briefly outline the construction of Ethena, how it maintains linked to the US dollar, and its risk factors.Finally, I will provide Ethena’s valuation model for governing the tokens.
After reading this article, you will understandWhy do I believe that Ethena is the best choice for a public chain -based synthetic US dollar in the encrypted ecosystemEssence
Note: The legal stable currency supported by the physical support is the tokens that the issuer holds the legal currency in the bank account, namely Tether, Circle, First Digital, etc.Synthetic statutory stable currency is a tokens that the issuer holds cryptocurrencies and uses short -term derivatives for hedging, namely Ethena.
Jealous green
Tether (code: USDT) is the maximum stable currency measured by circulating token.1 usdt = 1 dollar.USDT is sent between wallets such as Ethereum and other chains.In order to maintain linked, Tether holds $ 1 for USDT in the bank account in the bank account.
Without the US dollar bank account, Tether cannot perform the function of creating USDT, hosting USDT, and redeeming USDT functions.
create:Without a bank account, USDT cannot be created because traders cannot send US dollars.
US dollar hosting:Without a bank account, there is no place to hold USDT USD.
USDT’s redemption:Without a bank account, USDT cannot be redeemed, because no bank account can send the US dollar to the redemption.
Having a bank account is not enough to ensure success, because not all banks are equal.Thousands of banks around the world can accept US dollar deposits, but only some banks have the main account in the Fed.Any bank that hopes to use the Fed to perform its obligation to perform its obligations as an agency of the US dollar must hold the main account.The Fed reserves a complete free discretion of which bank’s main account is granted.
I will quickly explain the operation of the business banking business.
There are 3 banks: A, B and C.Bank A and B are located in two non -US judicial jurisdictions.Bank C is an American bank with a main account.Bank A and B hope to transfer the US dollar in the legal financial system.They each applied for the use of bank C as agents.Bank C evaluates the bank’s customer group and approve.
Bank A needs to remit $ 1,000 to Bank B.The capital flow was transferred from the account of bank A in bank C to Bank B’s account in bank C in bank C.
Let’s change the example a little, add bank D, it is also a US Bank of America with the main account.Bank A uses C Bank as an agency bank, and Bank B uses bank D as an agent bank.What happens when Bank A wants to remit 1,000 US dollars to Bank B?The flow orientation of funds is that bank C transferred $ 1,000 from its account at the Federal Reserve to Bank D’s account in the Fed.Bank D finally deposited $ 1,000 into the account of Bank B.
Generally, banks outside the United States use agency banks to call the US dollar globally.This is because once the US dollar flows between different jurisdictions, liquidation must be performed directly through the Fed.
I have been engaged in the cryptocurrency field since 2013, and usually, the banks that you deposit in the Capital Crypto Exchange in the French currency are not a bank registered in the United States, which means that it depends on the Bank of America with the main account to handle fiat currency depositsAnd withdrawal.These smaller non -American banks desire for deposits and bank cryptocurrency companies because they can charge high costs and do not need to pay any fees for deposits.Globally, banks usually urgently need cheap US dollar financing because the US dollar is global reserve currency.However, these small foreign banks must interact with their agent banks to handle the US dollar access business outside their residence.Although the proxy bank tolerates these fiat currencies related to the encryption business, no matter what reason, sometimes some crypto customers will be removed from smaller banks at the request of agency banks.If small -scale banks do not comply with regulations, they will lose the relationship between agency banking and the ability to transfer the US dollar internationally.A bank that lost the ability to transfer the dollar is equivalent to walking dead.Therefore, if the agency bank requires, small banks will always give up cryptocurrency customers.
When we analyze the strength of Tether’s bank partners, this agent bank is essential.
Tether Bank partner:Britannia Bank & Amp; Trust, Cantor Fitzgerald, Capital Union, Ansbacher, Deltec and Trust.
Among the five banks listed, only CANTOR FITZGERALD is a bank registered in the United States.However, none of these five banks did not have the Fed’s main account.Cantor Fitzgerald is a first -level dealer to help the Fed in implementing open market operations, such as buying and selling bonds.Tether’s ability to transfer and hold the US dollar depends entirely on the rise of the immortal agency bank.Considering the scale of Tether’s US Treasury investment portfolio, I think that their cooperation with Cantor is essential to continue entering the market.
If the CEO of these banking industry fails to obtain Tether’s equity in exchange for bank services, they are fools.When I introduce each employee income index of Tether later, you will understand the reason.
This is why Tether’s bank partners perform poorly.Next,I want to explain why the Fed does not like Tether’s business model, and why fundamentally has nothing to do with cryptocurrencies, and it is related to the operation of the US dollar currency market.
Full Reserve Bank
From the perspective of Tradfi, Tether is a completely reserved bank, also known as Narrow Bank.Fully reserved banks absorb deposits without lending it.The only service it provides is to remit money back and forth.Because the storage households do not face any risks, it almost does not pay the deposit interest.If all storage households are required to refund at the same time, the bank can immediately meet this requirement.Therefore, this name -completely reserves.In sharp contrast to some reserve banks, the bank’s loan scale is greater than the foundation of deposit.If all the storage households ask for funds from a part of the bank at the same time, the bank will go bankrupt.Part of the reserve bank pays interest to attract deposits, but the reserves are risky.
Tether is essentially a US dollar bank that provides US dollar trading services driven by public chain.No loan, no funny things.
The Fed does not like the banks who do not like the full reserve, not because of their customers, but because these banks how to handle deposits.In order to understand why the Fed hates the full reserve bank model, I must discuss the mechanism and influence of quantitative loose (QE).
Banks closed during the financial crisis in 2008 because they did not have enough reserve to make up for the loss of bad mortgage loans.The reserve is the fund for banks deposited in the Federal Reserve.The Federal Reserve monitors the scale of bank reserve in accordance with the total amount of loans.After 2008, the Fed ensures that banks will never have a shortage of reserve.The Federal Reserve achieves this through quantitative easing.
Quantitative easing is the process of purchasing bonds from banks and recording the reserve held in the Federal Reserve into the bank.The Federal Reserve carried out the purchase of tens of trillion dollars in quantitative loose bonds, resulting in the expansion of the bank’s reserve balance.Long live!
Quantitative easing did not significantly lead to inflation because bank reserve was stayed at the Federal Reserve.The popular stimulus gold is given directly to the people, allowing them to consume at will.If the bank borrows these reserves, inflation after 2008 will rise immediately because the money will be in the hands of enterprises and individuals.
The existence of some reserve banks is to provide loans; if they do not loan, they will not make money.Therefore, under the same conditions, some reserve banks are more willing to lend their reserve to paid customers instead of leaving them in the Federal Reserve.The Fed encountered a problem.How can they ensure that the banking system has nearly infinite reserves without causing inflation?The Federal Reserve chose to “bribe” from the banking industry instead of lending.
Browse banks require the Federal Reserve to pay interest for the excess reserve of the banking system.To calculate the amount of bribery, take the total amount of bank reserves held by the Federal Reserve multiplied by IORB.IORB must hover between the lower limit and upper limit of the federal fund interest rate.
Borrowing is risky.Borrower defaults.The bank would rather receive risk -free interest income from the Federal Reserve, nor is it willing to lend loans to the private sector and suffer possible losses.Therefore, with the advancement of quantitative easing, the growth rate of non -compensatory loans in the banking system is different from the growth rate of the Fed’s balance sheet.However, success is not cheap.When the federal fund interest rate is 0% to 0.25%, the cost of bribery is not high.But now, because the interest rate of federal funds is 5.25% to 5.50%, IORB bribes each year to make the Fed loses billions of dollars.
The Federal Reserve maintains the “high” policy interest rate to curb inflation; however, due to the high cost of IORB, the Fed has become unable to map.The U.S. Treasury and the U.S. public are directly funding to the Fed to bribe bank through the IORB plan.When the United States makes money, these funds will be remitted to the US Treasury.When the Fed loses money, the US Ministry of Finance borrows money and sends it to the Federal Reserve to make up for the losses.
QE solves the problem of insufficient banking reserve.The Fed now hopes to reduce bank reserve to inhibit inflation.Enter quantification tightening (QT).
QT refers to the Fed’s sale of bonds to the banking system and uses the reserves held by the Federal Reserve.Quantitative easing will increase banking reserve, while quantitative easing will reduce bank reserve.With the decline in banking reserves, the cost of bribery of IORB will also decline.Obviously, if the bank’s reserve increases the high interest rate to IORB, the Fed will not be happy.
The operation of the full reserve bank model runs counter to the Fed’s established goals.Banks with complete reserve do not issue loans, which means that 100% of deposits are deposited into the Federal Reserve as the reserve.If the Fed begins to grant a bank license with a completely reserved bank with a bank that is similar to Tether, it will exacerbate the loss of the central bank.
Tether is not a US -authorized bank, so it cannot deposit directly to the Fed and earn IORB.But Tether can deposit cash into the currency market fund, which can use the inverse repurchase program (RRP).RRP is similar to IORB. The Fed must pay the interest rate between the lower limit and upper limit of the federal fund in order to accurately determine the direction of the short -term interest rate transaction.The Treasury Coupon (T-Bills) is a zero-interest bond below one year, and its transaction yield is slightly higher than that of the recommended retail price (RRP) interest rate.Therefore, although Tether is not a bank, its deposit is invested in tools that require the Fed and the Ministry of Finance to pay interest.Tether invested nearly $ 81 billion in currency market funds and government bonds.Tether is stifling the Fed.The Federal Reserve is also impossible.
Tether arbitrage the Federal Reserve, because Tether paid 0%of USDT balance, but the earnings earned about the federal fund interest rate.This is Tether’s net interest difference (NIM).As you can imagine,Tether is very happy to raise interest rates from the Federal Reserve, because in less than 18 months (March 2022 to September 2023), the net interest difference rose from basically 0% to nearly 6%.
Tether is not the only stable coin issuer for the Federal Reserve.Circle (USDC) and all other stable coins that accept the US dollar parallel and issue tokens are doing the same thing.
If the bank abandons Tether for some reason, the Fed will not provide any help.
What about Yellen?Is there any contradiction between her finance department with Tether?
Tether is too large
US Treasury Minister Jennte Yellen needs a well -operated US Treasury market.This allows her to borrow the necessary funds to pay tens of trillion dollars per year.After 2008, the size of the US Treasury market expanded sharply with the fiscal deficit.The larger it grows, the more fragile it is.
The chart from the US government’s securities liquidity index clearly shows that the liquidity of the US Treasury market has been declining since its popularity (the higher the number means the worse the liquidity condition).Just sell a small amount to disrupt the market.The disrupting market I said refers to the rapid decline in bond prices or rising yields.
Tether is currently one of the 22 largest holders of US Treasury bonds.If Tether has to quickly reduce its holdings for some reason, it may lead to chaos in the global bond market.I said that globality is because all statutory debt instruments are priced in some ways, forms or forms, and are not affected by US Treasury curves.
If Tether’s bank partner starts Tether, Yellen may intervene in the following ways:
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Perhaps she will stipulate that a reasonable time for Tether to retain her customer identity so that it will not be forced to sell assets to quickly meet the redemption request.
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Maybe she will freeze Tether’s assets so that she cannot sell anything until she thinks that the market can absorb Tether’s assets.
But Yellen will definitely not help Tether find another long -term bank partner.Tether and the growth of similar stablecoins in the cryptocurrency market have brought risks to the US Treasury market.
Perhaps, if Tether decides to buy bonds that no one wants (that is, long -term bonds with a time limit of more than 10 years), not a short -term bill that everyone wants, then Yellen may stand on them.But why does Tether take this long -term risk to earn less money than shorter Treasury bonds?This is because the yield curve inverted (long -term interest rate is lower than the short -term interest rate).
The most powerful departments in American Peace -based financial institutions prefer Tether not to exist.And all this has nothing to do with cryptocurrencies.
Tether is too rich
Maelstrom’s talented analysts created the following speculative asset liabilities and profit and loss sheets for Tether.They combine Tether’s public disclosure and their judgments to create this result.
Here are the eight “too big but not backward” (TBTF) banks and its 2023 fiscal year of the United States under the rule of peace economy and political system under the United States.
Cantor Fitzgerald is not a bank, but a first -level dealer and a trading company.There are only 23 first -level dealers banks.Therefore, in the total deposit column, the number of Cantor represents the value of its balance sheet assets.I obtained the net profit of CANTOR and the estimation value of the total number of employees from Zippia.
The income of each employee of Tether is $ 62 million.No other banks can be comparable to it.Tether’s profitability is another example of how cryptocurrencies will affect the biggest wealth transfer in the history of human civilization.
Why do these TBTF banks do not provide a stable currency linked to fiat currency?Each employee’s income is higher than any of these banks, but without these banks and other similar banks, Tether cannot exist.
Maybe one of these banks can buy Tether instead of requiring Tether to go banking.But why do they do this?This is definitely not suitable for technology.Due to the transparency of public blockchain, the code for deploying Tether’s smart contract cloning is already on the Internet.
If I am a CEO of the Bank of America, who supports Tether, I will immediately relieve their bank accounts and provide competitive products.The first American Bank of America, which provides stablecoins, will quickly occupy the market.As a user, the risk of holding JPMORGAN shares is lower than Tether.The former is the responsibility of large but not pouring banks, and essentially the responsibility of the empire.The latter is the responsibility of a private company, which is contempt in the entire American banking system and its regulatory agency.
I have no reason to believe that a US Bank is conspiring to overthrow Tether.But this is insignificant.Why is Tether, which is owned by a cryptocurrency puppet that is strolling on the Bahamas, and its existence of 100% depends on the access authority of the US Banking system. In several trading days, the income exceeds Jamie Dimon?
With the advancement of cryptocurrency bull markets, any stocks that have nothing to do with cryptocurrency business will rise.Due to the panic of the market loan of non -performing commercial real estate, the stock price of a Bank of America is falling, and the bank can obtain valuations by entering the encrypted stabilization coin market.This may be all the motivation for Bank of America to compete directly with companies such as Tether and Circle.
If Circle’s IPO is progressing smoothly, the banking system is expected to face challenges.The transaction price of stable currency companies such as Circle and Tether should be lower than the income because they do not compete for the moat.Circle is a comedy itself.
There is no higher mountain than this …
I just explained why the US Bank of China destroy Tether than to defeat Caroline Ellison in the Mathematics Olympic Contest.But as an encrypted ecosystem, why should we create a stable currency linked to the legal currency?
Thanks to Tether, we know that the encrypted capital market is eager for a stable currency linked to the legal currency.The problem is that the services provided by the bank are very poor because there is no competition to make them better.With Tether, anyone with Internet connection can pay US dollars 24/7.
Tether has two main problems:
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Users will not receive any division of Tether’s NIM.
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Even if Tether acts according to regulations, it may be closed overnight.
By fair speaking, users of any currency usually do not share coinage tax income.Holding physical cash dollar banknotes does not mean that you have the right to obtain the profits of the Federal Reserve … but you can definitely bear its losses.Therefore, USDT holders should not expect to receive any net interest difference from Tether.However, a user base that should be compensated is a cryptocurrency exchange.
The main case of Tether is financing currency for cryptocurrency transactions.Tether also provides a nearly real -time way to transfer the legal currency between trading venues.As a place for cryptocurrency transactions, the exchange provides utility for Tether, but they do not get any returns.There is no TETHER governance tokens that can be purchased with NIM claims for holders.Unless the exchange acquires the equity in Tether in the early days, it cannot share the success of Tether.This is not a tragic story about why Tether should provide funds to the exchange.On the contrary, this will promote the exchanges to support the stable coin issuer, passing most NIMs to the holder, and providing the exchange to provide the opportunity to purchase tokens at the beginning of the issuer’s development at the beginning of the issuer.
It is very simple. If you want to surpass Tether, you must pay most of NIMs to the holders of stable coins and sell cheaply to the exchange to the exchange.This is the way the vampire squid attacks the stable currency supported by physical fiat currency.
Ethena acts strictly in accordance with this script.The holder of USDE can pledge it directly to Ethena and earn most NIM.The major exchanges invested Ethena in early financing.Ethena’s upper limit tables include Binance Labs, Bybit Via Mirana, OKX Ventures, Deribit, Gemini, and Kraken as exchange partners investors.
As far as the market share represented by these exchanges is concerned, they cover about 90% of the ETH non -closed contracts on major exchanges.
How does Ethena operate?
Ethena is an U.S. dollar encrypted stable coin supported by synthetic assets.
Eth = ether
STETH = lido pledged ETH derivatives
Eth = STETH
ETH = STETH = $ 10,000
ETH / USD permanent drop -down contract value = $ 1 ETH or STETH = 1 / ETH or STETH US dollar value
hook up
USDE is a stable currency issued by Ethena, which aims to link with the US dollar at 1: 1.
Ethena joined various authorized participants (APs).AP can cast and destroy USDE at a proportion of $ 1: 1.
coin:
Currently, accepting STETH LIDO, Mantle Meth, Binance Wbeth and Eth.Ethena then automatically sells ETH/USD permanent drop to lock the US dollar value of ETH or ETH LSD.The USDE of the equal amount of the agreement is matched with the value of the US dollar permanently hedged.
example:
AP is stored in 1 STETH, worth $ 10,000.
Ethena sells 10,000 ETH/USD = 10,000 US dollars/$ 1 contract value per part.
AP received 10,000 USDE because Ethena sold 10,000 eth/USD for each drop -off contract.
combustion:
To destroy USDE, AP deposits USDE into Ethena.Then, Ethena automatically replenished part of its short/USD permanent drop loss, thereby unlock a certain amount of US dollar value.The agreement will then destroy USDE and subtract a certain amount of ETH or ETH LSD according to the total amount of the unlocked US dollar.
example:
AP is stored in 10,000 USDE.
Ethena’s Slocating contract repurchase 10,000 ETH / USD = 10,000 US dollars / $ 1 contract value
AP receives 1 STETH = 10,000 * $ 1 / $ 1 / $ 10,000 STETH / USD minus the execution fee
To understand why, the transaction price of USDE on the stable currency trading platform such as CURVE should have a slight premium than the US dollar. I will explain why users want to hold USDE.
US dollar yield
The combination of ETH pledge yield and ETH/USD permanent drop -off funds is equivalent to high synthetic US dollar yields.To get this income, USDE holders mortgage it directly on Ethena applications.It only takes less than a minute to start making benefits.
Because SUSDE is about 30%of the high yield at the time of release; users who have already held a lot of dollars with less income will turn to SUSDE.This puts pressure on the buyer and will push the price of USDE in the CURVE pool.When the USDE’s transaction premium is large enough, the AP will intervene and arbitrage the difference.
Imagine: 1 usde = 2 usdt.If AP can create 1 USDE with ETH or STETH worth 1 USDT, they can get a risk -free $ 1 profit.This is the process:
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Import US dollar power to the exchange.
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Sell $ 1 for ETH or STETH.
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Stocking ETH or STETH on Ethena applications can receive 1 USDE.
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Save USDE on Curve and sell it at a price of 2 USDT.
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At a price of $ 2 in the transaction, 2 USDTs were sold and the dollar was withdrawn to the bank account.
If users think that Ethena is safe and the yield is real, then in this assumption examples, the USDT in circulation will decline, and the USDE in circulation will rise.
USST
People in the field of cryptocurrencies believe that Ethena will fail like USS.UST is a stablecoin attached to the Terra/Luna ecosystem.Anchor is a decentralized currency market agreement in the Terra ecosystem, providing 20% annual yield for those who pledge the UST.People can deposit into USS, and then Anchor will lend the deposit to the borrower.
Any stable coin issuer must persuade users why they should shift from (usually Tether) to new products.High yield is the cause of this transformation.
Uta is supported by Luna, and Bitcoin is purchased by sale Luna.LUNA is the governance tokens of the ecosystem.The foundation has most of Luna’s shares.Due to the high price of LUNA, the foundation will sell Luna to USS to pay a high USD interest.Interest rates are not paid in real dollars, but you have earned more UST tokens.Although the UST maintains a linked to the US dollar 1: 1, the market believes that if more UST is held, it will hold more dollars.
As ANCHOR’s total value of UST has increased, its USSTM interest expenditure has also increased.Foundation continues to sell LUNA to subsidize Anchor’s UST rewards.The yield only comes from the market that LUNA should be worth trillions of dollars.
When the price of LUNA began to fall, the death spiral of the algorithm stabilized currency began.Because Luna’s casting and destruction method is to maintain the hook of USD and US dollar 1: 1, as LUNA depreciates, it is more difficult to maintain the US dollar hook.Once anchoring the exchange rate breaks violently, all the US interest accumulated on ANCHOR becomes worthless.
Ethena yield rate
The way USDE generates income is completely different from UST.Ethena holds two assets that generate income.
Pledged ETH:
ETH uses lido (STETH) such as liquidity pledge derivatives for pledge.STETH earns ETH pledge income.ETH is stored in lido.Lido runs the verification node of ETH deposit capitalization and remit ETH pay for Ethereum network to STETH holder.
Perp swaps:
Permanently dropped is a series of continuous short -term futures contracts.The funding rate of most perpetual contracts is reset every 8 hours.The funding rate is based on the premium or discount of permanent residents and permanent residents.If the transaction price of perpetual contracts has premiumd by 1%compared to other perpetual contracts in the past 8 hours.The next period of funding rate is+1%.If the funding rate is positive, the long -term payment is short; if the interest rate is negative, the opposite is the opposite.
Ethena holds a sustainable drop short position to lock the US dollar value of the pledged ETH.Therefore, if the funds are positive, Ethena will get interest income.If it is negative, pay interest.Obviously, as a USDE holder, we hope that Ethena will receive interest rather than paying interest.The question is why ETH/USD’s long -term transactions have a premium?
Ethereum is now a deflation currency.US dollar is a inflation currency.If ETH decreases in the future, but the US dollar increases, then the long -term trading price of ETH/USD should be higher.This means that the transaction price of any leverage long -term derivatives (such as perpetual drop) should be higher than the spot.Most of the funds should be positive, which means that Ethena will receive interest.The data supports this.
What will cause Ethereum from a tightening currency to inflation currency?If Ethereum’s network use decreases sharply, ETH GAS burned each block will be much less.In this case, Ethereum blocks will be greater than Burning Ethereum.
What will cause the US dollar from inflation currency to a shrinking currency?American politicians need to stop spending a lot of money for re -election.The Fed must reduce its balance sheet to zero.This will cause the US dollar credit currency circulation to be severely contracted.
I think neither of these situations may happen.Therefore, for most periods of foreseeable future, there are reason to expected the financing interest rate to be positive.
USDE is not disc.
The combination of ETH pledge yields and positive sustainable drop funds generate USDE yields.The yield is not based on the value of Ethena governing the token.USDE and UST generate income in a completely different way.
Ethena risk point
Ethena has the risk of trading opponents.Ethena is not decentralized, nor does it try to decentralize.Ethena holds short -term perpetual drop -out positions on the Derivative Exchange (CEX).If these CEXs cannot pay for the loss of the swap position or the mortgage that cannot be returned, Ethena will suffer capital losses.Ethena tries to reduce the risk of direct trading by handing funds to third -party custodians, such as:
Tether’s transaction risk comes from TRADFI Bank.Ethena’s trading risk comes from derivatives CEX and cryptocurrency custodians.
CEX is an investor in Ethena, which has vested interests in the non -hacker attack and ensuring that its derivatives get appropriate payment.Derivative CEX is the most profitable cryptocurrency company, and they want to maintain this state.Fuck your customers is not a good business.With the development of Ethena, the growth of derivatives without liquidation contracts increases CEX cost income.All incentive measures are consistent.CEX hopes that Ethena will perform well.
Tether’s products help encrypt the operation of the capital market.The existence of cryptocurrencies is to de -intermediary TRADFI banks.Tradfi Bank hopes that cryptocurrencies will fail.From a fundamental point of view, the banking industry Tether has accelerated the demise of Tradfi.Incubic measures are inconsistent.Tradfi Bank does not want Tether to perform well, and regulators do not want Tether to perform well.
For us, Ethena comes from us, also known as Fubu (for us, by us).
Tether for us, from them, also known as Fubar (for us, by them).
LSD smart contract and punishment risk
Ethena holds ETH LSD.It is facing the risk of smart contracts.For example, Lido may have problems, causing STETH to become worthless.In addition, there is a risk of being punished.When the Ethereum node network validator violates certain rules, punishment will occur.As a punishment, the ETH capital held by the verifiedan will be reduced.
Negative funds
As I mentioned earlier, the permanent exchange financing interest rate may be negative for a long time.The financing interest rate may become very negative, so that the value of the net assets of Ethena assets is lower than the number of USDEs issued.Then USDE will break down the downlink hook.
Ethena smart contract risk
Just like Tether, Ethena runs smart contracts on the public blockchain.There may be errors in the code, resulting in unexpected behaviors, which eventually leads to losses of USDE holders.Usually, hackers will try to cast a large amount of stable coins for free, and then trade it to another cryptocurrency on platforms such as Uniswap or CURVE.As the supply of stable currency increases, the assets that support stable currency have not increased accordingly, which will cause the hook relationship to be broken.
However, Ethena’s smart contract is relatively simple, and most of its complexity lies in linked projects.The coin/redemption turn on the chain is only about 600 rows of code. Only approved participants can interact with the most sensitive contracts on the chain, which helps reduce the risk of preventing malicious and unknown trading opponents.
Growth limit
The supply volume of USDE can only increase to the total number of liquidations for transactions to the total number of transactions.The amount of circulation of legal stable coins supported by physical support is about 130 billion US dollars.Ethereum’s non -leveling contract of all exchanges was $ 8.5 billion.All exchanges are US $ 12 billion, and another 31 billion US dollars of Bitcoin contracts are not closed. Once Ethereum decides Bitcoin as a collateral, these contracts can be used.Because the total amount of Bitcoin and Ethereum’s unbound contract is about 43 billion U.S. dollars, in view of the current market conditions, Ethereum cannot occupy the first position.Although Ethena starts from ETH, BTC and SOL are very easy to add to their systems, which is just a sorting problem.
As cryptocurrencies grow as an asset category, the amount of liquidation will always grow.Some people believe that cryptocurrencies will reach $ 10 trillion in this cycle as an asset category.At this level, Considering that Ethereum is the second largest cryptocurrency in the statutory market value, the uniform uniform equity may exceed 1 trillion US dollars and it is not ridiculous.
Ethereum will grow with the growth of cryptocurrencies.
Insurance fund
The purpose of insurance funds is to reduce financial losses caused by the above risks.If the interest rate of funds becomes negative or decoupled by the US dollar, these funds will act as the bidder of USDE in the open market.The fund consists of stable currency (USDT and USDC), STETH, and USDE/USD LP positions.At present, the capital of insurance funds comes from the funds of the Ethena Labs financing round, as well as part of the unsecured parts generated by USDE.In the future, with the increase of USDE’s circulation supply, these funds will be capitalized through long -term return.As of writing this article, the insurance fund is $ 16 million.
Neither USDT and USDE are no risks.However, risks are different.Tether and Ethena may eventually fail, but the reasons are different.
When people start to believe that USDE’s yield is not high, the amount of flow of USDE increases.
This is where the upcoming Ethena govern tokens play a role.
Ethena valuation
Like any currency issuer, Ethena’s life and death depends on the coinage tax.This is the difference between the cost of creating currency and the cost of creating currency.I want to propose a simple model to valuation Ethena based on these coin tax income.For those who may purchase Ethena governing tokens in the next few months, you should at least try to build a model to evaluate the protocol.
Any distribution of USDE can be pledged and earned ETH pledge plus sustainable capital income.As of now, Ethena will allocate the income generated by the assets that support SUSDE, and the income generated by the assets that support the mortgaged USDE will be sent to the insurance fund after the film activity, and the revenue will enter the agreement.I estimate that long -term segmentation will be 80% of the income generated by the protocol, and the USDE (SUSDE) of the pledgedness will be included in the Ethena protocol.
Ethena agreement annual income = total income * (1–80% * (1 – Susde supply / USDE supply))
If 100% USDE is pledged, the SUSDE supply = USDE supply:
Ethena agreement annual income = total income * 20%
Total yield = USDE supply *(ETH pledge yield + ETH PERP drop capital)
ETH pledge yields and ETH PERP SWAP funds are both variable interest rates.Recent history can guide our future possibilities.
ETH pledge yield -I assume that the PA yield is 4%.
ETH PERP SWAP Funds -I assume that PA is 20%.
The key part of this model is that the full dilution valuation (FDV) of the income multiple should be used.This is always a guessing game, but I will propose some future paths based on similar DEFI stable currency projects.
With these multiple as a guidance, I created the following potential Ethena FDV.
This week Ethena’s $ 820 million in assets generated 67%of their yields.Suppose the supply ratio of SUSDE and USDE is 50%, then it is inferred that one year laterEthena’s annualized income is about $ 300 million.The FDV obtained from the valuation of ONDO is 189 billion US dollarsEssenceDoes this mean that Ethena’s FDV will be close to $ 200 billion when launching?No.But this does mean the market’s high valuation for Ethena’s future revenue.
Summarize
If you don’t remember other contents of this article, please remember this:
For us, Ethena comes from us, also known as Fubu (for us, by us).
Tether for us, from them, also known as Fubar (for us, by them).
You can decide whether to do more or short USDE or the final Ethena govern tokens.I hope this article can explain Ethena’s mission and why it is so important to the success of cryptocurrencies.
Speaking of which, I bid farewell to you because I must focus on tearing these hard skin and not to damage my thighs.
